Silver ceiling: why solar may cap the precious metal’s run

Precious metals like gold and silver are often viewed primarily as monetary assets, leading many investors to monitor the gold-to-silver ratio to gauge relative value. While silver is historically more volatile than gold, it is prone to aggressive rallies from speculative momentum where it overshoots, as seen in 1998, 2011, and the recent surge over the last few months.

Source: FactSet

This speculative frenzy has supercharged Australian silver-related stocks. Pure-play developer Silver Mines (SVL), holder of Australia’s largest undeveloped silver project at Bowdens, has surged about 200% over the past year. Junior explorers such as Andean Silver (ASL) and Unico Silver (USL) have delivered similar explosive gains of 200% or more in the same period. Even diversified major South32 (S32) — operator of the world-class Cannington mine, one of the world’s largest silver producers — has rallied strongly, reaching multi-year highs.

However, unlike gold, silver’s trajectory is also dictated by its heavy industrial footprint. In 2025, industrial use accounted for 61% of total silver demand, dwarfing the contributions from jewellery (21%) and investment coins and bars (18%).

Source: World Silver Survey 2025

While total silver demand has grown at a modest 1.8% annually over the last decade, its internal composition has shifted dramatically. The photography industry, once a dominant driver of silver demand, has been in structural decline since its 1999 peak. Conversely, driven by China’s aggressive renewable energy push, solar panel manufacturing has become the dominant engine of growth. Demand in this sector has climbed 10% per annum, rising from just 7% share of total silver demand a decade ago to 17% today.

Source: World Silver Survey 2025

With silver's large industrial consumption led by surging demand from solar photovoltaic manufacturing, investors should look beyond the gold-to-silver ratio and instead monitor the silver-to-copper ratio, which currently sits near all-time highs. 

Source: FactSet

Solar manufacturing is a high-volume, low-margin business particularly sensitive to these costs. Today, silver represents roughly 29% of a finished module's expense, up from around 8% ten years ago. This cost pressure has forced industry leaders like JinkoSolar, Trina Solar, and LONGi to reach a critical juncture to redesign their manufacturing process or face margin collapse.

Manufacturers are now aggressively substituting silver for copper, particularly within Heterojunction (HJT) and back-contact technologies. By utilizing silver-coated copper pastes, producers are already cutting silver consumption by 50%, with  roadmaps targeting 90% reductions. The shift is accelerating toward total elimination; Aiko Solar has already launched silver-free lines, while LONGi Green Energy targets mass production of silver-free cells by Q2 2026. These moves are a direct response to the high prices fueled by speculation, which have made silver's dominance in solar unsustainable.

While silver’s monetary status may provide a price floor amid economic uncertainty, its industrial ceiling is being lowered by the solar industry. The silver-to-copper substitution is essential for solar manufacturers to survive margin pressures and remain competitive. As these companies successfully decouple their production costs from silver, the metal stands to lose its single largest source of demand growth. The same speculative fervor that propelled silver to its recent soaring hieghts may now contribute to its demise, as the industry's accelerating transition to copper fundamentally alters its global demand outlook.